US Dollar Gains as Trump Considers 10% China Tariffs
The US dollar (USD) strengthened against major currencies after President Donald Trump indicated he was contemplating a 10% tariff on imports from China.
* Offshore yuan weakened, while the risk-sensitive New Zealand dollar led the decline against the USD following Trump's comments on potential tariffs in response to the flow of fentanyl from China.
* Demand for safe-haven assets, driven by policy uncertainty under Trump's administration, contributed to the dollar's advance.
* A robust US economy, high interest rates, and the dollar's dominant status as a reserve currency further bolster its prospects for gains.
* "The news exemplifies the intentional policy of uncertainty by the Trump administration," said Rodrigo Catril of National Australia Bank.
* Prior to Trump's inauguration, expectations regarding his trade policy actions had a significant impact on Chinese markets.
* The dollar experienced volatility on Tuesday after Trump's comments on possible tariffs on Mexico and Canada from February 1st.
* Uncertainty surrounding Trump's trade policies continues to drive market movements, with analysts predicting increased currency volatility due to his unpredictable approach.
* "The strong dollar narrative remains unchanged," according to Brown Brothers Harriman & Co. strategists. "We anticipate that any finalized tariff plan will amplify the factors currently fueling the ongoing dollar rally."